Deciding how much your time and skills are worth is a challenging task for many freelancers. If you set your prices too low, you could miss out on some hard-earned cash, while charging too much could deter business.
A lot of factors go into deciding how much to charge, such as what type of work the project requires, how much time you'll dedicate to it and how much experience you have.
The first thing you should decide is how much money you want or need to make annually. To come up with this figure, you may want to look at how much you currently make, or at comparative wages on websites such as Glassdoor and Salary.com.
After you figure out how much you want to make annually, you can calculate how much you need to make per month or day to reach that goal. To help with the numbers, you can use freelance hourly rate calculators.
"I price based on what I want my daily income to be, which requires having a good sense of how much time a given project will take," said Katharine Paljug, a freelance content creator and editor. "For example, if you wanted to make $200 per day, and you know that a project will take you two days to [complete], you'll need to charge $400."
However, when you're just starting out, there will be times when you just don't know what to charge for a project – and that's OK. Before you blindly send an estimate, here are some key factors you should consider and tips for setting your prices.
Set rates based on your experience.
Most employees can expect raises periodically. The same should be said for freelancers.
"I increase my rates every year," said Paljug. "I think experience plays a huge part in how I value my work; I'm much more confident pitching higher rates now than I was when I first started out."
Consider charging per project.
Danielle Corcione, freelance journalist and founder of The Millennial Freelancer, and Paljug both recommend charging per project. When you charge per project rather than per word or hour, you typically make more money and aren't penalized for working more efficiently. At the end of the day, clients care most about the quality of your work.
"I think it's easier on clients to know exactly what they are paying upfront," Paljug told Business News Daily. "Pricing per project also ensures that I don't lose money because I become a better and more efficient writer."
It's also important to note that hourly pay can vary greatly depending on the project scope, so charging per project can make payment more consistent for both you and the client.
"Certain stories require more research, while others are about topics I'm well versed in already," said Corcione.
Factor in taxes.
When you're self-employed, your income usually isn't taxed until you file for taxes. It's wise to set aside part of your income for tax season. When you are deciding on the price of a project, be sure to consider the taxes you'll eventually have to pay.
Charge extra fees when necessary.
Paljug says she adds extra charges to her base rate for special circumstances.
"If a client needs rush delivery, that's an extra 50 percent on top of the base free," she said. "If they need next-day delivery, that's an extra 100 percent, because I have to completely rearrange my schedule to accommodate for that."
You'll also want to consider any expenses you may incur during a project, and add that in before giving a client an estimate.
Consult with other freelancers.
If you aren't sure what to charge, ask around. There are a lot of resources for freelancers, such as Facebook groups.
"I usually consult with other freelancers as to what I'm charged to get an idea, but I take into account how much time and energy it takes for me to complete a task, as well as how much income I need to make ends meet financially," Corcione said.
For more information on establishing a successful freelance business, visit this Business News Daily guide.